Your credit score or FICO report can affect whether or not you can get a loan, how much interest you pay on loans, and even whether or not you get a job. Since you have nothing to lose and everything to gain by raising your score, it should be one of the first steps you take to get your finances in order.
Here are 5 things you can do to make your credit score better.
Tip #1: Get a free copy of your report:
The first step to fixing your credit is to figure out what your score is right now. The Big Three credit reporting agencies and the Federal Trade Commission have made a deal so that every U.S. citizen can get a free credit report every 12 months. Go to the official Annual Credit Report Request Service website and follow the instructions to get your free copy.
Pay your bills on time:
How quickly you pay your bills makes up a full 35 percent of your FICO score. If you haven't made a payment on time in the past few years, going back to the creditors and getting caught up will likely help your score a lot. If you pay your overdue bill, your creditors will remove these mistakes from each of your credit reports. Hint: Pull your report again later to make sure that all three agencies have done what they said they would do and taken care of the problem.
Tip #3: Make sure the balance is right:
10 percent of your credit score is based on the different kinds of debt you have and the credit lines you can use. Make sure you have the right number of credit cards, store cards, charge cards, and auto or home loans. This good mix shows possible lenders that you know how to deal with different kinds of debt.
Tip 4: Get out of debt:
Your debt-to-credit ratio is the ratio between how much you owe and how much credit you have. It's responsible for a full 30% of your credit score. You can get out of debt in three ways: 1. Make more money. 2. Pay off more of your debt with the money you already have. 3. Lower the cost of your debt. Transferring your credit card balances to credit cards with lower interest rates is a great way to lower the cost of your debt. If you have a lot of credit card debt and do this, you could save $100 or more each month on debt payments.
Tip #5: Get more credit lines:
You can also improve your debt-to-credit ratio by getting more credit. The important thing is to do this without using these new credit cards. If you don't want to use the cards a lot, make one or two purchases with them each month and then hide them so they are hard to get to. Also, if you do decide to open more lines of credit, spread them out over a few months. Too much new credit can hurt your score.
There are many easy ways to make your credit score better. So, get your free report, look at it, and start taking steps toward a better financial life.
